The recent Paycheck Protection Program "pig-out" hascomplicated efforts to pass another stimulus package by earlyAugust, according to political analyst Greg Valliere, as thebillions of dollars sent to "well-connected firms that didn't needhelp" has "embarrassed Congress."

On July 1, the House and Senate extended the PPP for small businesses until Aug. 8, withmore than $130 billion still available.

Valliere, chief U.S. policy strategist of AGF Investments, saidin his Wednesday morning briefing that while another stimulus bill will likely get done, "it's not aslam-dunk, and it will take time — which will be in short supplywhen Congress comes back in the middle of this month before leavingagain for most of August."

On July 6, the Treasury Department and Small BusinessAdministration released a much-anticipated report on the firmsthat have received PPP loans.

Lobbying firms as well as hedge funds — and even Kanye West —got money, "much of which is considered 'forgivable loans,'"Valliere said. "And the banks that processed these translations gothuge fees."

Sen Marco Rubio, R-Fla., chairman of the Senate Committee onSmall Business & Entrepreneurship, "is proposing PPP reforms inthe next bill, which may only affect firms with 300 or feweremployees, and the firms must show that they have sufferedsignificant losses," according to Valliere.

Treasury Secretary Steven Mnuchin told CNBC's "Squawk on theStreet" Thursday morning that he's had "very productiveconversations" with Rubio, and they both plan to talk with Sen. BenCardin, D-Maryland, ranking member on the Small Business Committee,next week; "So there is already bipartisan work," Mnuchin said. "Ithink any extension around the PPP is going to be much, much moretargeted to the businesses that really need this money and thesmaller businesses."

As to unemployment insurance, "We're going to make sure thatpeople are incented to go back to jobs," Mnuchin said. "I've heardstories of where companies are trying to get people back to workand they won't come because the enhanced unemployment. But we'llfix that and we'll figure out an extension to it that works forcompanies and works for those people who will still beunemployed."

Meanwhile, Rep. Jamie Raskin, D-Md., and 33 House membersurged SBA Administrator Jovita Carranza andTreasury Secretary Steven Mnuchin in a Wednesday letter toimmediately issue guidance clarifying that small-business ownerswho returned their PPP loans are able to reapply for the programgiven that the terms have been substantially improved by therecently adopted Paycheck Protection Program Flexibility Act.

"Numerous constituents have expressed concern that their lenderswere unable to process their second loan application or wereuncertain about whether they should because the first loan had beenreturned," the lawmakers wrote.

Many small businesses that previously returned their disbursedloans "are now eager to benefit from the improved program," thelawmakers stated. "Yet contrary to a statement from an SBAspokesperson that companies which have returned PPP loans would beable to reapply, many small businesses have been flatly rejectedfor a loan after resubmitting their materials. Lenders and SBAemployees appear to be erring on the side of caution and informingsmall business owners that each company may only have one loan,even if the loan was promptly repaid in full."

An SBA spokesperson told Politico's Morning Moneynewsletter that companies that returned money can reapply for PPPloans as long as their original loan has been canceled in SBA'ssystem.

Stimulus details 'in flux'

A new spike in COVID-19 cases "has convinced most of Congress —including Mitch McConnell — that another stimulus bill isnecessary, but the details are still in flux," Valliere said.

Lawmakers return next week, and will "have to move quickly toaddress the $600 in weekly unemployment benefits," which expire atthe end of July, Valliere said. Widely considered a disincentivefor people to return to work, the souped-up unemployment benefit"probably will be lowered or replaced by a hiring bonus."

What will a new package include? Senate Majority Leader MitchMcConnell, R-Ky., "is insistent on passing COVID-19 liabilityprotection," Valliere explained. "Aid to states seems mandatory.Another round of stimulus checks is increasingly likely. And thePPP program probably will get a little more money, with eligibilitystandards tightened dramatically. New infrastructure outlays areunlikely in this package."

The price tag is also in flux, Valliere added, "with $1 trillion— McConnell's goal — a likely floor. President Trump may seek moremoney in an effort to boost the economy ahead of the election;something around $1.5 trillion seems likely."

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